On Tuesday, Jefferies made a notable adjustment to its rating on Sonova Holding AG (SOON:SW) (OTC: OTC:SONVY) stock, shifting from a "Buy" to a "Hold" stance. The firm also revised its price target for the hearing aid manufacturer, setting it at CHF 300.00, up from the previous CHF 290.00.
The decision to downgrade comes as Sonova experiences a significant re-rating compared to its peer, Demant, and as forecasts for fiscal years 2024 and 2025 are closely aligning with consensus expectations.
The analyst from Jefferies pointed out that while a new platform launch is anticipated in the fall, it is expected to substantially boost earnings only from the second half of fiscal year 2024/2025. Additionally, a potential but gradual return to sales through Costco (NASDAQ:COST) may not provide immediate impetus for the stock's performance.
The Jefferies analyst also noted a reduction in earnings per share (EPS) estimates for 2024 and 2025 by 15%, attributing the decrease mainly to non-operational items. Despite the price target increase of 3%, the perceived absence of short-term catalysts for Sonova is seen as a potential drag on its near-term market performance.
In the broader context of the hearing aid industry, Jefferies maintains a structural preference for Amplifon (AMP (OTC:AMLTF)) among the pure-play hearing aid companies. This preference is sustained despite the recent changes in the outlook for Sonova.
InvestingPro Insights
As Sonova Holding AG (SONVY) navigates through the market, real-time data from InvestingPro provides a deeper dive into the company's financial health. With a market capitalization of $19.06 billion and a P/E ratio of 28.97, Sonova is trading at a significant valuation. The company's Price to Book ratio, as of the last twelve months ending Q4 2024, stands at 7.03, indicating a premium compared to the book value of its assets.
InvestingPro Tips highlight that Sonova has demonstrated a commitment to shareholder returns, having raised its dividend for three consecutive years. Moreover, the stock's low price volatility may appeal to investors looking for stable equity in their portfolios. Analysts predict profitability for the company this year, which is corroborated by its performance over the last twelve months. However, the stock is trading near its 52-week high and at a high EBITDA valuation multiple, which suggests that it may be priced optimistically.
For investors seeking more comprehensive analysis, InvestingPro offers additional insights, including a fair value estimate of $60.27, which is slightly below the current trading price. For a deeper understanding of Sonova's investment potential and access to further InvestingPro Tips, consider using the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 11 additional tips available on InvestingPro, investors can make more informed decisions regarding Sonova's stock.
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